Tips on managing and improving your credit score

Tips on managing and improving your credit score

Building a good credit score (also known as credit rating) is crucial because it can affect your ability to borrow money or access products such as credit cards or loans.

Here are some top tips to help you manage and improve your credit score:

1. Actually check your credit score

Understanding your credit score is the first step in ensuring it remains healthy.

2. Check for incorrect information or fraudulent activity

If something on your credit report is incorrect or doesn’t apply to you (i.e. if someone applied for credit in your name without your knowledge), this can negatively impact your score. Contact the credit reference agency immediately.

3. Prove where you live – register on the electoral roll

If you name is not there, you will find it much harder to get credit.

4. Pay all bills on time

A payment that is late, even by just a few days, can have a negative impact on your score. If you are behind on any payments, bring them current as soon as possible.

5. Do not go overdrawn unless you have an agreed overdraft facility.

If you do have the facility, never exceed it. Try not to use more than 25% of it and pay it off as quickly as you can.

6. Build your credit history

While never needing to borrow money sounds perfect, in fact, having little or no credit history, can make it difficult for companies to assess you and your credit score may be lower as a result. If you do not have a credit card, apply for one, BUT manage them responsibly; set up a direct debit to repay the balance in full every month (don’t just make the minimum payment).

7. Keep your credit utilisation low

This is the percentage you use of your total credit limit. Lenders like to see low ratios as it indicates you have not maxed out all your credit cards and likely know how to manage credit well. As a general rule, try not to use more than 25-30% of your available credit.

8. Finally, only borrow what you can afford.

Problems with debt can lead to consequences such as County Court Judgements (CCJ), an Individual Voluntary Agreements (IVA) or even bankruptcy. These will stay on your credit report for up to 6 years and will have a serious impact on your score.

Please get in touch if you'd like to know more about how Trusted Mortgage can help you.